Protection

Relevant Life


A Relevant Life policy is a term assurance plan, available to employers to provide an individual death-in-service benefit for directors and employees.

The policy pays a lump sum if the employee dies while employed and during the term of the policy. It will usually pay out immediately if the employee is diagnosed with a terminal illness (except during the final 12 months of the policy). Death benefits are paid through a discretionary trust. Under current rules, such payments are free from inheritance tax.

Whilst being similar to other types of life cover, a Relevant Life policy differs by providing a tax-efficient employment benefit. It can only be set up as a single-life policy on the life of an employee (not a partner or sole business owner). Premiums must be paid by the employer.

Relevant Life is a tax-efficient way to provide life cover as an employee benefit for selected staff members. It isn’t a pension scheme, so there are no scheme registration complexities and the insurer will provide the required Trust Deed. Furthermore, the benefit won’t form part of the employee’s lifetime pension allowance or annual tax-relieved pension allowance.

The employer’s premium payments aren’t benefits in kind; and current legislation exempts them from income tax and National Insurance. Furthermore, premiums are an allowable business expense for employers and can be set against profits for tax purposes.

We will be happy to provide more information on Relevant Life policies and to advise whether they are suitable for you.